Hardin Hilltop Wind Farm……An Example of Community Wind in Iowa

Kansas Community Wind WorkshopCloud County Community CollegeConcordia, Kansas

October 31, 2006

Thomas A. Wind

Wind Utility Consulting

Jefferson, Iowa

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Topics I Will Cover

• Initial formation of project

• Electrical Interconnection

• Need for Incentives• Key Issues• Economic

Feasibility• Benefits of the

Project

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Initial Formation of Project

• All wind projects start with one person…. the one who has the “crazy idea”

• It was a crazy idea for many reasons

• He pesters the others who then reluctantly buy into the “crazy idea”

• He becomes the “champion” for the project.

Local Land Owners and Farmers who Own the Wind Turbine Project

4Greene County

Hardin Township

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7.35

7.20

7.05

6.90

6.75

6.60

6.45

6.30

6.15

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Meteorological Test Tower Installed November 2003 Cost $11,000

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Farmer-Owned Wind Farm Proposed in

Greene County, Iowa

Greene County

Hardin Township

HHW

Interconnection

Photo by GE Wind -

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High Voltage Transmission System for the Upper Midwest

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High Voltage Transmission System for Iowa

Little generation in this area…This helps with getting transmission access!

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New 34.5 kV Underground Line

Existing 34.5 kV OHTransmission System

Interconnecting the Project to the Grid

The main interconnection issues for this project are the power factor and operating voltage levels at the Point of InterconnectionThere will be a 4- month period of reduced output due to substation equipment delays.The wind farm will also be subject to occasional curtailments over its lifetime

Point of Interconnection

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About half of the wind turbines were turned off due to insufficient transmission capacity

Buffalo Ridge Minnesota this Morning from 10,000 feet

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Key Issues

Photo by GE Wind -

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The Major Challenge for This Project:--- Wind turbine procurement ---

• It is a Seller’s Market!• Most major manufacturers have no wind turbines available

for 2006 or 2007– Large wind farm developers have purchased most wind

turbines– Earliest delivery for major new projects may be in 2008– A few turbines become available as construction

schedules slip– Three years ago, delivery time was 20-25 weeks

• Manufacturers favor larger orders rather than smaller orders since they make more money– In many cases, no manufacturers may even bid on

supplying a single wind turbine• To get a turbine in the near future you may have to work

through a larger developer• Avoid single turbine projects unless you have a lot of

money!

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Power Purchase Agreement

• Local utility (Alliant Energy) was required by PURPA to purchase power

• All power will be sold to the local investor-owned utility serving in the area– Fifteen year term contract– Power sold at utility’s long term avoided cost

(about 3 ¢ per kWh) as required by PURPA– Green tags are separately valued and sold

• Wind power will be integrated in with the utility’s other power supply resources– Alliant likes wind power, one of the largest

purchasers of wind power

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Financial Structure is LLC Flip Model

• Ownership structure based on Minnesota LLC Flip model– Outside Investor for utilizing income tax benefits (“Tax

Investor”) becomes a partner in your LLC and provides the majority of the capital

– Ownership flips sometime after 10 years from Tax Investor to local owner when the tax benefits lapse and when the Tax Investor achieves his target rate of return

• Seven USDA grants were obtained averaging $247,000 each– Reduces Production Tax Credit and depreciation basis

for Tax Investor• Iowa Energy Center $250,000 nine-year zero interest loan• Local owners will have modest down payment• Long-term debt partially from local bank and partially from

outside debt sources

Need forIncentives to beEconomically

FeasibilityPhoto by GE Wind -

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Cost ofMoney

WindSpeed

Priceof Electricity

Higher ValuesDISCOURAGE

WindGeneration

Higher ValuesFAVOR

WindGeneration

Cost ofTurbine

Cost toInterconnect

Financial Incentives

The Overall Economics of Wind Generation is Determined by a Balance of Factors

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12

3 4 5 67

M

Wind Turbine #1

Met TowerM1

0.02 Mps per

ColorChange

Mean Annual Wind Speed

In Meters per Second at 50 Meters

Selecting Specific Sites

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Wind Turbine

Underground 34.5 kV

Legend

Alliant OH 34.5 kV

Jefferson Water Works Sub

Point of Interconnection(West Side of WW Sub)

Alliant Substation

To Grand Jct. 161/115/34.5 Sub

To Jefferson &Scranton

161/34.5 Sub

1.0 Mile

3.6 Mile 34.5 kV Lineto Center of Wind Farm

Jefferson, IA

N

Hardin HilltopWind Farm

Turbine 1 Zontos Wind, LLCTurbine 2 Sutton Wind Energy, LLCTurbine 3 Hardin Wind Energy, LLCTurbine 4 Wind Family Turbine, LLCTurbine 5 Poverty Ridge

Turbine 6 Cy-Hawk Wind Energy, LLC

Turbine 7 Greene Wind Energy, LLC

12 3

4 5 67

34.5 kV

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Economic Feasibility• A small project usually

cannot be cost competitive on a per kWh basis with a 100 MW wind project

• Small projects need something extra to make them feasible:– Higher selling price

for the power AND / OR– Financial

incentives.

Foundation under construction for 2.1 MW wind turbine near Jefferson, Iowa

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Need for Financial Incentives• Iowa provides a 1.5 ¢

per kWh tradable state tax credit for 10 years

• Each local owner applied for a USDA Section 9006 grant, which averaged $247,000 each

• Each local owner received a $250,000 nine year zero interest loan

• All of these were necessary to be competitive in this lower wind speed area.

Completed foundation for large 2.1 MW wind turbine near Jefferson,

Iowa

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Benefits fromthe Project

Photo by GE Wind -

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Plowing in underground high voltage cables for wind turbines

Locally Generated Power

• Reduces high voltage transmission grid losses since power is generated where it is used

• Tends to reduce congestion on the high voltage grid if the wind generation is in an area with little generation.

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The view from top of one farmer-owned wind turbine in Iowa

(235 feet high)

Local Property Taxes

• Iowa allows the county board of supervisors to phase in and abate property taxes for privately-owned wind generation projects

• The Hardin Hilltop project will pay about $25,000 per turbine per year after the 7 year phase-in period.

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Electrical Infrastructure

• The construction of the turbines, electric lines and substations adds to the electrical infrastructure

• The established wind site and equipment will have value after the normal wind turbine lifetime of 20-25 years

• This value is often ignored, but it may be very significant in the long term.

Proposed Locally-Owned

15 MWWind Farm

JeffersonScranton

Churdan

Grand Jct.

Rippey

Paton

• The proposed wind farm would generate about 47,000 megawatt-hours per year

• Jefferson uses about that same amount of energy per year

• The Proposed Wind Farm Will Be a Significant Supplier of Electricity to the County

• The whole county uses about 100,000 MWH per year

• Along with a second hypothetical wind farm about the same size, the two wind farms would generate enough energy on average to provide all of the county’s electricity needs.

JeffersonScranton

Churdan

Grand Jct.

Rippey

Paton

HypotheticalSecond

Wind Farm

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Proposed Locally-Owned

15 MWWind Farm

JeffersonScranton

Churdan

Grand Jct.

Rippey

Paton• The 15 MW Locally-Owned Wind Farm Will Save the Equivalent of Enough Coal To Fill a Train 3 Miles Long Every Year